What is Lenders Mortgage Insurance (LMI)?
Sat, 04/04/2009 - 15:47 — admin
When loan to value ratio increases above a certain amount the lender may require that the loan is mortgage insured to cover the increased risk that is involved.
The level varies depending on many factors and most loans are subject to LMI when there is less than 20% deposit or owner equity involved in the security property.
Some loans may require LMI even if there is more than 20% equity level and some lenders mortgage insure every loan.
There are other options available from certain lenders where the loan can be approved with no mortgage insurance involved when it would normally be mortgage insured and the interest rate is increased instead.
Usually the lenders mortgage insurance premium can only be calculated after the total loan amount is known and a firm valuation for the property has been received.
Then the premium is calculated from the ratio of these factors, and from a sliding table of percentages that increase with risk such as loan amount, loan to value ratio, documentation level for the application, geographic area the security is located in etc.
GST and stamp duty which varies from state to state must be added to the premium.
Custom Search
Important!
Important Information!
All information and loan option scenarios contained within this no deposit home loan site can only be general in nature and may not suit your specific individual requirements! Always seek independent professional advice before selecting or applying for any type of finance. Information, products and services are subject to change or alteration or withdrawal without notice. Always check before acting and always seek independant professional advice.